It’s obviously important to have as good a product strategy as possible in any company, but especially in the dynamic, fast-moving markets that software and hardware companies often compete in. Corporate strategy development is critical for tech product companies.
But I also subscribe to the old notion that it’s better to have an average strategy with great execution than the other way around. At the end of the day, execution is almost always key.
So one of the things I like to explore when developing a product strategy for a company or business unit is “what are the real constraints” that will impact that strategy? Because time and time again, a “great” product strategy developed in a vacuum, without a solid understanding of these real impediments, tends to fit into that sad category of a “great strategy–implemented poorly”. That’s because these constraints doomed the strategy from the beginning. This happens regardless of how creative and forward-thinking the said strategy was.
What I’m calling “corporate constraints” can vary widely depending on specific circumstances. For any company/market/point-in-time, there are a few items that tend to pop up frequently. Let’s take a quick look at some of these constraints:
Government vs. Commercial
This is one of the more difficult issues to overcome, in either direction. Pure government contractors have an atrocious track record of entering commercial markets. This happens for a variety of cultural and structural reasons. Pure commercial companies have very little chance of getting traditional government contracts without the right contacts or experience. Although commercial companies can gain considerable government business outside of traditional contracting. Both of these issues can be overcome, but not without eyes wide open. You can read more about the differences between government and commercial sales & marketing here.
Management biases and attitudes in corporate strategy development
This is hard to characterize as it comes in a variety of forms. But I have found that senior managers often suffer from “comfort disease”. This means they only feel right doing things in the same manner (and sometimes with the same people), which has worked well for them in the past. If the new strategy is taking you off in a new direction that requires a new, different approach, no matter how promising, this can become a real problem.
Current corporate focus vs. strategy
Similar to the above point, sometimes it’s not the attitudes/biases of management that are the issue. It is due to the current business the company is in. In these cases, the existing staff and other corporate resources may not be well matched to what is required to execute the new strategy.
$B product ideas in $M companies
Sometimes the management and staff are fully capable of executing the new strategy. However, corporate budgets and other required resources are just not adequate to bring the product to the market in the required fashion. Let alone to compete in the new market segment in the long term.
$M products ideas in $B companies
Conversely, if you come up with a nice multi-million dollar product idea in a multi-billion dollar company, the idea is often doomed from inception. That’s because it takes a certain amount of fixed resources to launch/focus on anything new in a large company. That’s regardless of the ultimate revenue derived from it. Multi-million dollar products don’t move the needle in a multi-billion dollar company. This makes them uneconomic and doomed to fail from lack of attention, if nothing else.
Inability of the sales force/channel to sell this particular product
Sometimes this is because the new product is much more complex than what is currently being sold. Or it needs to be sold to a different customer segment than the current sales operation focuses on. Sometimes, for economic reasons, a direct sales-oriented company needs to sell a new product via channels and doesn’t know how to do this. In other circumstances, a new product really requires the added attention of a direct salesperson. And some companies don’t have the internal sales resources to use that sales model successfully. There are a variety of potential issues of this nature. The important point is that you need to ensure your new product strategy is well-matched with your sales/distribution capabilities.
Inability of the sales force to sell ANY additional products
This one is surprising, but I discovered it the hard way through personal experience. One would think that adding complementary products that can be sold to the same customers would always be a good thing for a sales force/channel. But it just ain’t so. Like anyone else, sales folks have a finite capacity for how many things they can master and focus on. If you add one too many products into the sales bag, you are likely to find the new product completely ignored.
Developer/techie markets vs. corporate/SMB markets
Often, a software or hardware technology will initially be developed and targeted at other software developers or an engineering market segment. This can work well. We call them “next bench” products, as the product developers understand the target market well, because the product is essentially for themselves. But when a company tries to extend that technology or develops a new product technology for traditional corporate customers, things can easily fall apart. The ease-of-use requirements are much more demanding for corporate end-users than for engineers or software developers. And the marketing and selling methodology can be very different as well.
International vs. domestic corporate strategy development
This issue is a pretty simple one to understand. And one I believe nearly every company needs to overcome, or their growth will eventually be stunted before its time. Many companies are quite successful in their home markets and either stub their toes or fail miserably when they head into international markets. This occurs for a variety of reasons. You can read several more articles I’ve written about international sales & marketing issues here.
There are many more potential issues with corporate strategy development similar to those listed above. These issues can throw a wrench into what may otherwise look like an ideal corporate or product strategy. I’m sure you can add to the list.
At the end of the day, strategy must be grounded in the realities facing the company if it is to have the best chance of success. Some may find this limiting. Indeed, sometimes it may be appropriate to throw caution to the wind and ignore where you’ve been and where you’re at now. This thinking, on occasion, leads to a true game-changing breakthrough for a company. But more often than not, it leads to failures and firings.
So what do you think? Am I overstating the effects of these items on the outcome of corporate strategy development? Should a good strategy be enough to stand on its own? Let us know your thoughts with your own comments below.
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Corporate constraints can strongly influence how technology products are planned and developed, even when the product idea itself is promising. I find this important because effective product strategy must balance innovation with resources, organizational priorities, and practical limitations.
Developing a technology product strategy requires businesses to consider both opportunities and internal constraints. I find this valuable because factors such as resources, capabilities, and organizational priorities can strongly influence which product ideas are realistic and sustainable.